By Katherine Tomaszewski
Case Summary
In August 2022, Iranian non-government organizations (NGOs) Iran Thalassemia Society and EB Home, supported by other plaintiffs filed suit in the Federal District Court in Oregon against the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), requesting that the District Court enjoin the U.S. government from imposing economic sanctions that have caused medical aid to cease to Iran.
Specifically, the NGOs argue that the “maximum pressure” sanctions on Iran, implemented by President Trump in 2018, prohibit the delivery of life-saving drugs and medical devices to Iran to this day, resulting in the death of over 600 Iranian thalassemia patients and the pain and suffering of numerous epidermolysis bullosa (EB) patients. Therefore, the NGOs assert that OFAC’s policies essentially extended economic sanctions to those who assist in providing medical assistance and humanitarian aid to Iran, which is prohibited under US law.
Who are the plaintiffs, and why are they suing OFAC?
The plaintiffs in this case include two groups of patients: EB patients and thalassemia patients, each represented by NGOs dedicated to their respective conditions: EB Home which represents over 500 EB patients, and the Iran Thalassemia Society with over 23,000 member patients.
EB is a genetic disorder that is characterized by extreme skin fragility. It requires special wound dressings to prevent trauma to healing skin. This disorder is particularly harmful to babies and young children. Mepliex, an EB dressing manufactured by Sweden-based Molnlykcke Healthcare is considered to be the most effective treatment for young EB-patients. According to the plaintiffs, the wrong wound dressings can cause extreme pain and suffering.
Thalassemia is a genetic blood disorder that results in deficient production of hemoglobin. The primary treatment for thalassemia involves blood transfusions, which over time create an accumulation of iron in the body that can lead to iron toxicity. To remove the excess iron, thalassemia patients require iron-regulating drugs. The plaintiffs state that the supply of such medications from the leading supplier of iron-regulating drugs, the Swiss pharmaceutical company, Novartis, and key ingredients for these medicines produced by the French company Roqutte Frères, have ceased sending to Iran based on U.S. sanctions. UN experts have stated that thalassemia patients in Iran have been penalized over compliance with U.S. sanctions against Iran because the sanctions have “reduced their access to vital medication from abroad.”
How has the case progressed so far?
The NGOs originally requested a preliminary injunction and declaratory judgment when they filed suit in Aug. 2022, requesting that the District Court prohibit OFAC from continuing its “threats to impose sanctions on third-party banks,” so that banks may provide “necessary financial arrangements” for delivery of medical aid. The District Court denied this request. OFAC then moved to dismiss the case on the grounds that the two NGOs lacked standing to pursue the claims. The District Court granted OFAC’s motion to dismiss in May 2023. The NGOs have filed an appeal with the Ninth Circuit Court of Appeals on the basis that the District Court erred in finding that the plaintiffs lack standing.
What is standing, and how will it affect the outcome of this case?
Standing is the main issue on appeal in Iran Thalassemia Society et. al v. OFAC. Under Article III of the US Constitution, federal courts only have jurisdiction over actual “cases-or-controversies”. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006). The Article III “case or controversy” requirement mandates that all plaintiffs must establish standing to sue another party. To achieve standing, a plaintiff must establish:
- “an injury in fact that
- is fairly traceable to the challenged conduct and
- has some likelihood of redressability.”
See Jewel v. Nat’l Sec. Agency, 673 F.3d 902, 908 (9th Cir. 2011), citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992).
In its dismissal, the District Court stated that the NGOs failed to show causality, meaning they failed to establish that their injuries are fairly traceable to OFAC’s actions. Rather, the Court emphasized the role that the banking sector played in denying the necessary financial transactions to send these medical supplies to Iran. The Court concluded that the medical supplies and transactions needed for EB and Thalassemia patients are not being facilitated to Iran due to “the speculative fears of third-party banks,” rather than OFAC’s actions. The District Court also stated that plaintiffs have failed to establish that there is some likelihood of redressability, i.e., that if the District Court granted the plaintiff’s request, the injured plaintiffs would then receive the medical supplies needed.
On Appeal: How did the NGOs respond to the District Court’s dismissal?
Causality:
On appeal, the NGOs disagree with the District Court’s analysis and argue that they do indeed meet the requirements of standing. The NGOs contend that there is a direct causal link between OFAC’s economic sanctions and the termination of deliveries of medical supplies, citing, among other case law, a letter from Mölnlycke Healthcare stating that it is unwilling to sell its products to Iran because of U.S. economic sanctions. Although third-party banks are involved, the NGOs argue these banks withdrew from the Iran financial services market due to OFAC’s sanctions policies, which subsequently impacted the ability to send humanitarian aid and medical supplies to Iran. To further support this assertion, the plaintiffs cite the United Nations Special Rapporteur on the negative impact of the unilateral coercive measures on the enjoyment of human rights, Arlena Doulan, who visited Iran to investigate the impact of sanctions on the Iranian People. In her report, she noted “[t]he refusal by producers of medicines and medical devices . . . to conclude contracts with Iranians, the rejection of banks to do any transaction, and of transportation companies to guarantee deliveries, has resulted in documented growing mortality and disability rates of people with rare and severe diseases; . . ..”
Redressability:
The NGOs argue that a court ruling prohibiting OFAC from continuing its threats to impose sanctions on third-party banks would effectively redress the injury caused to their patients by significantly increasing the likelihood of access to necessary medical supplies. The plaintiffs cited Novak v. United States, 795 F.3d 1012 at 1019-20 (9th Cir. 2015) to support their position. According to the NGOs, third-party banks are “directly dependent” on OFAC for their continued well-being, as they are subject to OFAC fines and penalties.
What’s next?
The NGOs have filed an appeal with the Ninth Circuit Court of Appeals and now wait for OFAC to file its response. After OFAC files its response, the parties expect the Ninth Circuit to schedule an oral argument before a three-judge panel. This case highlights the longstanding issues that humanitarian actors face when it comes to sanctions. The District Court employed reasoning we’ve seen in this space before: OFAC cannot control the actions of third-party independent banks that make their own, private-sector decisions when it comes to financial transactions. And yet, we clearly see a correlation between OFAC’s sanctions policies and these decisions by private actors not to transact in sanctioned regions, which in turn, impact the ability of humanitarian actors to operate in these areas. This back-and-forth between regulators and the private sector will continue to harm innocent civilian populations, whether indirectly or directly, unless all actors can come to a sustainable solution whereby OFAC can effectively implement sanctions policies, while simultaneously allowing the private sector can feel comfortable and motivated to transact in conflicted and sanctioned areas where humanitarian aid is needed the most.
The Charity & Security Network will continue to monitor the case and provide updates to this post as the court proceedings continue.